How The Internet and Low Wages Are Killing Big Box Stores

Goldman Sachs analysts have estimated that big box store like Walmart and Target are on their way out because people are shopping online more; thanks internet.

Alongside online sales, people have become more prone to shopping at “narrow format” stores like dollar stores, drug stores, and warehouse clubs like Sam’s, the Huffington Post reported. However, smaller brick-and-mortar stores haven’t dealt as severe a blow to the big box chains as online megastore Amazon.

Target’s profit decreased 16 percent in the first quarter from a year before. Several retail data firms cite the convenience these narrow format stores offer over big box stores while offering lower prices. Sites like Amazon consistently offer the same products as big box stores at lower prices, and considering the weakened state of American wages, it has hurt the likes of Walmart and Target.

Amazon has completely demolished Walmart in the online market. Last year, Walmart had $10 billion in online sales, Amazon had $68 billion. This should be a wakeup call to big box stores. Walmart notoriously pays its workers such meager wages that its employees can’t even shop there, and that’s considering the employee discounts.

Big box stores’ low wages are perpetuating their own demise as they are driving their very own employees away as potential customers. Because Walmart pays such low wages, the federal government is paying out $6.2 billion in public assistance every year. If Walmart and other big box stores would just pay a living wage, then the government would save lots of money.

Because Walmart’s and Target’s profits have both dropped, they are coming up with a new plan. But, is it paying its employees better wages to encourage in-store shopping? No, they want to open smaller stores in densely populated urban centers.

It’s time that big box stores start stimulating the economy and encouraging shopping instead of driving people into the poor house. They are drastically behind the curve.

Josh is a writer and researcher with Ring of Fire. Follow him on Twitter @dnJdeli.